Blockchain data analytics firm Chainalysis released a new study of cryptocurrency usage in Latin American countries based on on-chain data and interviews with experts in the region last week. The study is part of the firm’s Geography of Cryptocurrency Report, due to be released this month. Cryptocurrency adoption in Latin America is driven by factors such as a lack of banking access, remittance needs, and the devaluation of local fiat currencies.
Sebastian Villanueva, who manages the Chile operations of crypto exchange Satoshitango, explained that the lack of banking access for individuals and businesses is a major drive for cryptocurrency adoption in Latin America. “Lots of people here have uneven income because they do gig work for Uber or places like that, which makes it hard for them to get a bank account,” he said, asserting:
Many Latin Americans use stablecoins like DAI and USDC to lock in their savings, Villanueva noted. Chainalysis explained that a significant share of the stablecoin transfer volume in the region is from traders using fiat to buy bitcoin or stablecoins, like tether, from local exchanges or P2P exchanges, and then use those funds to trade on larger exchanges like Binance that provides more trading pairs and greater liquidity. “This is a common pattern not just in Latin America, but in other developing regions as well,” the firm noted.
“Currency instability is another factor driving cryptocurrency adoption in Latin America,” Chainalysis claims, noting that “the amount of P2P trading volume in many Latin American countries rises as native currency depreciates.” The firm elaborated:
Latin America also has a robust crypto trading scene, with Brazil in the lead in terms of the most cryptocurrency usage by on-chain volume. Venezuela is a distant second, but the country accounts for the third-highest number of transfers on Localbitcoins and Paxful, two of the most popular worldwide P2P exchanges, as news.Bitcoin.com recently reported.